Unemployment numbers

According to the US Department of Labor’s Bureau of Labor Statistics the official seasonally adjusted unemployment rate for May 2004 was 5.6 percent. We all know that the unemployment rate is not based on an actual count of not working people; it’s based on a formula that approximates the number of people that fit in a category called “unemployed.” According to the Bureau of Labor Statistics’ website, “Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.”

The Bureau tweaks the formula from time to time, but at no point does it ever measure the number of people who actually want work. No one knows what the real number is, except to say that it is bigger than the official unemployment rate. So far this is all old news. What’s new to me is the fact that the Bureau does attempt to produce a more accurate number. The May 2004 report includes something at the back called “Table A-12. Alternative measures of labor underutilization.” In this table they show six different ways of calculating unemployment.

The official count is number three on the table—5.6 percent last month. Methods one and two give a rosier picture. Method four adds the “permanently discouraged” and raises the total to 5.9. Method five adds the “permanently discouraged” and the “other marginally attached” (persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past). This raises the rate to 6.6. Method six adds in people who want full-time work but have had to settle for part-time, which brings us up to 9.7 percent of the labor force. How they calculate what qualifies as “the labor force” is a question for another time.

I don’t have a profound point to make out of all of this. This is just me discovering something I didn’t know. I’ve never actually read a US unemployment report (oddly, I have read Serbian ones), but I will be going back each month to check out table 12 and get a better idea of how things are.